Redemption of life insurance and gains taxation
It all depends on the duration of the contract, and the date of redemption.
If the holder of a life insurance contract decides to redeem him before a period of 8 years, the taxation on gains will be much higher than if he decides to redeem him between the 4th year and the 8th year, But always more than if it retains the 8 year contract and bought it beyond the 8 years of detention.
Redemption of a life insurance contract in the first 4 years
Gains are incorporated into revenues and are subject to a tax rate of 35%, plus social levies (17.20%) or total taxation of 52.20%
Redemption between the 4th and the 8th year
The achieved gains are always integrated into revenues, but they are no longer subject to the rate of 15%, to which social levies are still added (17.20%), a total of a levy of 32.20%
Redemption beyond the 8th year
An abatement will be applied: € 4,600 for a single; 9,200 € For a couple, and gain or gain will be imposed at the rate of 7.50%, to which social security contributes continue to add (17.20%).
Gains collected from September 27, 2017
The last Finance Act has changed the taxation of life insurance, with the establishment of the "Flat Tax", not only applied to life insurance buyback gains.
The premiums collected after September 27, 2017 are subject to the new collection mode, called the "unique lump sum levy", or "PFU", also known as Flat Tax. It amounts to 30% or the sum of the social levies rates (17.20%) and income tax (12.80%), beyond a premium threshold paid equal to 150,000 € for a single, and € 300,000 for a couple.
This measure of the government is intended to facilitate the redemption of life insurance. Indeed, if the contract has a seniority of less than 8 years, the tax rate is then more interesting than the previously practiced rate, while nothing changes for contracts over 8 years, which retain the allowance : € 4,600 for a single, € 9,200 for a couple.
The threshold below which the rate of the lump sum levy increases to 7.5%, in addition to social levies (17.20%), is less than € 150,000 for a single, and less than € 300,000 for a couple .
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